Madrigal Theater Company is interested in estimating fixed and variable costs. The following data are available for the month of December:

	Number of Tickets Sold	Cost
December	4,200	$365,000
Detail of Cost:
Author royalties/fees*		$ 80,000
Wages (actors, ticket office, ushers, etc.)		165,000
Rent		60,000
Utilities		7,000
Food and beverages		29,400
Depreciationtheater equipment		14,000
Owner's salary		10,000
Total		$365,400

Author royalties/fees are fixed because the theater pays for the right to put on the play; royalties and fees are not paid based on the number of tickets sold.

REQUIRED

a. Use account analysis to estimate fixed cost per month and variable cost per tickets sold [i.e., estimate a and b in the equation Cost = a + (b Sales)]. Assume the only variable cost are in food and beverages.

b. Assume that the selling price per ticket is $25. Additionally, on average each ticket holder spends $10 on food and beverages. Based on your answer to part a, what is your estimate of the contribution margin ratio at Madrigal Theater?